What is an M&A Target List?
Before you can have a conversation about selling your company or acquiring someone else’s company in an M&A deal, you need to have someone to speak to! It’s one of those crazy things about mergers and acquisitions. If you want to find a Buyer or Seller, you have to seek it out, and that starts with a target list (list of potential deal partners).
Creating a target list starts with basic brainstorming of any and all companies that you would like to buy, merge with, or be bought by.
As with any brainstorming session, no idea is a bad idea. Even if you think of a company that isn’t a right fit, merely mentioning that company may cue your memory (or someone else’s memory) of another type of company that is a suitable fit. Consider this your shortlist.
The most obvious targets include competitors, but vendors and customers may also make suitable M&A targets. You need to weigh the relative merits and risks of contacting competitors, vendors, and clients; every situation is different, so working with an experienced M&A advisor, who also probably has a shortlist of possible targets, is so important.
Spending time on the Internet is important. You can learn a lot about a company by reviewing its website and searching for news articles. You should also consider using proprietary databases to conduct research. A couple favorites include CapitalIQ and OneSource.
After you complete the basic brainstorming, you’re ready to compile a target list.